You must have heard of the word Net Worth, and wonder what it is. Actually, your net-worth isn't how much you are valued, rather it is a basic indicator of your financial state.
That you are earning more money doesn't guarantee or prove that you are getting richer. If we are to look at the indicator of a net worth, then we will have to remove liability from asset, and it will be indicated in clear data. So I am going to follow this definition, it means that whatever income is coming in minus whatever negative finance or expenses that I make. This negative financial statement can be as a result of debt, credit card loans, mortgage, and so on.
On this note, it means that acquiring assets needs to be high on priority, and it should be part of what you should discuss in your family. Actually, the rich usually discuss acquiring assets while the poor find it very hard to do this possibly because of the type of mindset that they have. Poor families would focus more on liabilities than assets and that is why they will spend more time talking about liabilities, and more money buying them while they depreciate in assets.
You should know that spending money doesn't mean that you are acquiring assets. You can be recording outflow without acquisitions of assets. You should not spend money on liabilities first before thinking of assets instead it should be the opposite.
It is no doubt that most people are born into low income family and they have decided to remain in the same position because of their mindset. The rich people know that they are rich while poor people know that they are poor. The poor isn't really interested in stocks, businesses, sales and acquisition, they are rather interested in getting depreciating supposed assets.
Understanding and increasing your net worth is not just about earning more; it's about smartly managing and growing your assets while minimizing and controlling liabilities. This approach requires a shift in mindset, especially for those born into lower-income families. Breaking the cycle of poverty and moving towards financial stability involves a conscious effort to prioritize asset acquisition, invest wisely, and educate oneself about financial management. By doing so, individuals can change their financial trajectory, regardless of their initial socioeconomic status.
Posted Using InLeo Alpha
